Gambling on Brexit

This Thursday, June 23, the UK will vote on either to remain in or leave the European Union. It’s a big deal: a very big deal. Will turn our back on the 27 other member states and strike out on our own or make the leap of faith and stay in the game?

Opinions are sharp, strong, and divided. Atheist author and biologist Richard Dawkins thinks that UK Prime Minister David Cameron is ‘playing Russian roulette’ with the UK’s future by letting the public have a referendum. According to Dawkins, it’s a decision that’s ‘too difficult and detailed to be left to voters who know no economics’.

Despite Dawkins, the public will be casting its vote soon and it seems that only one thing is certain: no one really knows what the outcome will be. If we remain, will hoards of immigrants and bureaucrats from Brussels cross the Channel? If we leave, will the UK be a lonely, unloved, wallflower at the European economic ball?

This week, we focus on what a Brexit might mean for some of the world’s leading online gaming companies. With scores of operators in both Gibraltar and Malta, an exit from Europe could have potentially serious repercussions for both the businesses and the thousands of staff who work in them.

Offshore Origins

The first question is: why do the world’s most popular online sports books, poker rooms, and casinos locate themselves in places like Malta and Gibraltar?

The answer is simple: money. These destinations offers advantageous financial environments and tax breaks to attract business. At the end of the day, if you are running an online casino, it doesn’t matter where your servers are situated. All you need is infrastructure that can support your network.

Malta and Gibraltar are also both a relatively short flight from the UK. The cost of living is good, the quality of life is great, and both locations are highly desirable places to live. It all adds up to an attractive proposition for both the businesses and its staff.

At the moment, working in Europe is hassle free and easy. No permits are required and you can relocate for as long as you desire. Brexit could potentially change all this.

GIBRALTAR: Between a Rock and a Hard Place

Gibraltar is a tiny peninsula on the southernmost tip of Spain. You can see Morocco clearly from its coast. The small British Overseas Territory has its own government and is ferociously loyal to the UK. There is a tourist industry but its economy relies heavily on financial services and the gaming sector.

The Rock is home to some of the world’s biggest gaming companies, including Mansion, 888, Bwin Party, Stan James, and Carmen. Staff hail from all over the world, with a large percentage coming from the UK.

Spain has already indicated that a UK exit from Europe will be problematic. Spanish Prime Minster Mariano Rajoy said that ‘Gibraltar is the last colony in Europe in the 21st century’. The border between Spain and Gibraltar has been a sore point for years but must remain open because of the UK’s membership of the European Union. A Brexit could see the Spanish police slamming on the bureaucratic border brakes or even closing it altogether.

Gibraltar’s Chief Minister Fabian Picardo warns that the tiny British Overseas Territory thrives on its ability to trade in the EU. There are only 30,000 people on the Rock. Every day, more than 10,000 people cross the border from Spain to work. This fractious border will be tested in the case of a Brexit.

“In past years, we’ve been able to avail of our rights under the Treaty of Rome. We lose the right to use that legal lever against Spain if we leave the European Union. That is what’s under threat. I would ask that you spare a thought for Gibraltar when you are in the voting booth. Leaving the EU would severely challenge our economy,” Picardo said.

In Gibraltar’s online gaming sector there are few voices in favour of a Brexit. “They locate here for financial reasons,” says Phill Brear the Gibraltarian government’s gaming commissioner. “An exit from the single market would not directly impact on the sector, but would have repercussions, given that young people from all over Europe work here, entering and leaving each day: they might not be prepared to pay the political price of isolation,” he said.

A former employee for Bwin.Party said: “One of the most attractive reasons to work in Gibraltar is the opportunity to live across the border in Spain. Gibraltar is great but it’s only six square kilometres and two thirds of that is the rock.

“If the Spanish border police are having a bad day, it can be difficult to get through customs because of extended checks. If a Brexit takes place, crossing the border every day could become impossible. Living in Spain is a real joy. I have got my fingers crossed that we remain part of the EU,” he said.

Although most of the major gaming company’s key staff are keeping mum on the exit, 32Red company director Ed Ware is one of many senior gaming experts concerned about the outcome: “a no vote would be very worrying for us,” he said.

They are jittery in Gib.

Meanwhile… In MALTA…

One thousand, one hundred and three miles away, and 80 km south of Italy, the beautiful island of Malta is less concerned about the possibility of a UK exit from the European Union. Economic growth on the island grew by 5.2 per cent last year, three points ahead of the European average.

However… exports to the UK count for 7.8 per cent of the country’s gross domestic product. Malta is also home to 100s of licensed online casinos and sports books – all happy to take advantage of the island’s relaxed regulatory framework. Not to mention the great weather, the diving, the proximity to Europe, and a wide range of other financial and personal incentives.

At this year’s International Association of Gaming Advisors summit, held just a few weeks ago, one of the issues discussed was the lack of harmonization between the member states of the EU. Despite the EU Treaty slogan promising an ‘ever closer union among the peoples of Europe’, the threat of a Brexit could undermine any quest for gaming regulation unity.

One anonymous employee for a Malta-based online sports book and casino said a Brexit could be a potential nightmare. “Everyone here is a little bit edgy at the moment because the polls are now starting to shift towards the UK leaving the EU.

“There are dozens of ex-pats working here with UK passports. Will we still be able to work freely in Europe? It will take a couple of years for the UK to sever its ties but we are nervous about the outcome. Many of us have made lives for ourselves in Europe and enjoy the freedom to move from country to country. I think it would be a disaster if we left.

“Ironically, most of the betting up until now has been on the UK remaining in the UK. If there is a Brexit, we might have a good day at the office but the long-term prognosis is not as healthy,” he said.

The Morning After

Online sports books and casinos make it their business to predict the outcome of events. It’s what they do. At the time of writing, just a few days ahead of the vote, the polls suggest the UK is split 50/50, with a lean towards a Brexit.

If the UK leaves, there will be a two year grace period as the dust settles.

The only significant resource an online gaming business needs is staff and servers. If the benefits of doing business in Malta and Gibraltar evaporate, the companies will relocate and take their assets with them.

Will the UK still be a played on the European stage? Watch this space…

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